Shri Mahesh Harikrishandas Amin(HUF), Nadiad v. The Addl.CIT., Cent.Range,, Baroda

ITA 2451/AHD/2009 | 2000-2001
Pronouncement Date: 27-09-2011 | Result: Allowed

Appeal Details

RSA Number 245120514 RSA 2009
Assessee PAN AAIHM2859P
Bench Ahmedabad
Appeal Number ITA 2451/AHD/2009
Duration Of Justice 2 year(s) 1 month(s) 7 day(s)
Appellant Shri Mahesh Harikrishandas Amin(HUF), Nadiad
Respondent The Addl.CIT., Cent.Range,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 27-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 27-09-2011
Date Of Final Hearing 20-09-2011
Next Hearing Date 20-09-2011
Assessment Year 2000-2001
Appeal Filed On 19-08-2009
Judgment Text
. .. . . .. . . .. .!' !' !' !' !' !' !' !' # # # # $ $ $ $ IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBLE SHR I A.MOHAN ALANKAMONY A.M.) . ITA NO. 2451/AHD./2009 : ' %&- 2000-2001 . ITA NO. 2452 / AHD./2009 : ' %&- 2003-2004 MAHESH HARIKRISHANDAS AMIN (HUF) BARODA VS- ADDL. CIT CENTRAL RANGE BARODA (PAN : AAIHM 2859P) ()* /APPELLANT) ( + )* /RESPONDENT ) )* - . / APPELLANT BY : SHRI J.M.TRIVEDI + )* - . / RESPONDENT BY : SHRI SAMIR TEKRIWAL SR.D.R. /'0 - 1# / DATE OF HEARING : 20/09/2011 2!% - 1# / DATE OF PRONOUNCEMENT : 27/09/2011 / ORDER PER SHRI T.K. SHARMA JUDICIAL MEMBER : THESE TWO APPEALS FILED BY THE ASSESSEE ARE AGAINS T TWO SEPARATE ORDERS BOTH DATED 25-02-2009 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-IV AHMEDABAD CONFIRMING THE PENALTY OF RS.18 19 871/- AND RS.8 L AKHS LEVIED BY THE AO UNDER SECTION 271E FOR THE ASSESSMENT YEARS 2000-2001 AND 2003-2004 RESPECTIVELY. 2. BRIEF FACTS ARE IN RESPECT OF PENALTY OF RS. 18 19 871/- LEVIED UNDER SECTION 271E ARE THAT IN THIS CASE SEARCH ACTION UNDER SEC TION 132 OF THE I.T. ACT WAS CARRIED OUT AT THE PREMISES OF SHRI MAHESH HARIKRISHANDAS A MIN ON 19.01.2006. DURING THE POST SEARCH ENQUIRY ON VERIFICATION OF SB A/C. NO. 3921 WITH BANK OF MAHARASHTRA IN THE NAME OF THE ASSESSEE IT WAS OBSERVED THAT THER E WERE DEPOSITS OF RS.22 10 101/- RS.4 03 000/- AND RS.10 35 909/- ON 12/04/1999 07/ 08/2002 AND 07/12/2002 RESPECTIVELY. THE ASSESSEE WAS ASKED TO EXPLAIN THE ABOVE CREDITS IN THE BANK ACCOUNT VIDE THE STATEMENT RECORDED ON 16/02/2006. IT WAS A LSO EXPLAINED BY THE ASSESSEE THAT ITA NO. 2451&2452-AHD-09 2 HE STARTED BUSINESS OF SHROFF IN HIS HUF CAPACITY 2 5 YEARS AGO. IN THE YEAR 1979-80 HE ADVANCED AN AMOUNT OF RS.14 LAKHS TO SHRI KARTHI K KETHIWADI BIJKENDRA OF UTTARSANDA VILLAGE ON INTEREST. THE ABOVE PERSON PA ID INTEREST IN THE INITIAL 3-4 YEARS BUT IT STOPPED PAYMENT OF INTEREST THEREAFTER. THE ASSESSEE FILED A PETITION BEFORE THE HONBLE COURT IN THE YEAR 1983 TO RECOVER AMOUNT OF RS.16 37 720/- INCLUDING INTEREST FROM THE ABOVE PERSON. SUBSEQUENTLY THE HONBLE CO URT AWARDED THE FOLLOWING AMOUNTS TO THE ASSESSEE ON ACCOUNT OF THE DEBTS FRO M SHRI KARTHIK KETHIWADI BIJKENDRA. 12/05/1999 RS.22 10 101/- 07/08/2002 RS. 4 03 000/- 07/12/2002 RS.10 35 929/- 25/03/2005 RS. 13 214/- IN AGGREGATE THE ASSESSEE RECEIVED AN AMOUNT OF RS .36 62 244/- TILL 25/03/2005 AS AGAINST HIS TOTAL ADVANCES OF RS.16 37 720/-. IN TH IS WAY THE ASSESSEE IN HIS HUF CAPACITY HAS EARNED INTEREST OF RS.20 28 524/- DUR ING THE PERIOD 01/04/1999 TO 31/03/2005 AS MENTIONED ABOVE. 2.1 ON THE BASIS OF ABOVE FACTS A NOTICE UNDER SEC TION 148 WAS ISSUED TO THE ASSESSEE HUF AND ASSESSMENT WAS FRAMED UNDER SECTIO N 147 R.W.S. 143(3) ON 31.12.2007 AT A TOTAL LOSS OF RS.13 320/- AS UNDER: INCOME FROM OTHER SOURCES : INTEREST INCOME AS SHOWN IN THE STATEMENT RS.16 80 444/- LESS: INTEREST TO THE DEPOSITORS AS DISCUSSED ABO VE RS.16 93 764/- (-) RS. 13 320/- LESS: DEDUCTION U/S 80-L AS PER STATEMENT RS.3 773 BUT ADMISSIBLE RS. NIL__ TOTAL LOSS (-) RS. 13 320/- 2.2 THE AO HAS MENTIONED THAT THE ASSESSEE HAS VIOL ATED THE PROVISIONS OF SECTION 269T AND ATTRACT THE PENAL PROCEEDINGS UNDER SECTIO N 271E OF THE IT ACT 1961 IN RESPECT OF PAYMENT OF RS.18 19 870/- INCLUDING INTE REST. SUBSEQUENTLY VIDE ORDER DATED 14.10.2008 THE AO LEVIED THE PENALTY OF RS.1 8 19 870/- UNDER SECTION 271E FOR THE ASSESSMENT YEAR 2000-01. ITA NO. 2451&2452-AHD-09 3 3. ON APPEAL IN THE IMPUGNED ORDER THE LD. CIT(A) CONFIRMED THE PENALTY OF RS.18 19 870/- ON THE GROUND THAT THE CASE OF THE A SSESSEE DOES NOT FALL IN THE EXCEPTIONS MENTIONED UNDER RULE 6DD OF THE I.T. RUL ES 1962. 4. FACTS RELATING TO LEVY OF PENALTY OF RS.8 LAKHS UNDER SECTION 271E FOR THE ASSESSMENT YEAR 2003-04 ARE THAT FOR THIS ASSESSMEN T YEAR THE AO FRAMED THE ASSESSMENT ON 31.12.2007 UNDER SECTION 147 R.W.S. 1 43(3) OF THE ACT AT A TOTAL INCOME OF RS.1 71 366/-. IN THIS ASSESSMENT ORDER THE AO HAS STATED THAT ALL THE FACTS OF THE CASE ARE SIMILAR AS ALREADY DISCUSSED IN THE CASE O F THE ASSESSEE FOR THE ASSESSMENT YEAR 2000-01. FOR THIS ASSESSMENT YEAR ALSO THE AO OBSERVED THAT BANK ACCOUNT OF THE ASSESSEE REVEALS REPAYMENT OF RS.8 LAKHS TO THE CRE DITORS ARE MADE IN CASH FROM THE AMOUNT RECEIVED FROM SHRI KARTHIK KETHIWADI BIJKEND RA. THUS THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269T AND ATTRACT S THE PENALTY UNDER SECTION 271E. FOR THIS HE MADE A PROPOSAL TO THE ADDITIONAL CIT CENTRAL RANGE BARODA TO INITIATE PENALTY UNDER SECTION 271E OF THE I.T. ACT 1961. S UBSEQUENTLY THE ADDITIONAL CIT CENTRAL RANGE BARODA LEVIED THE PENALTY UNDER SECT ION 271E OF RS.8 LAKHS FOR THE ASSESSMENT YEAR 2003-04. 5. ON APPEAL IN THE IMPUGNED ORDER THE LD. CIT(A) CONFIRMED THE PENALTY OF RS.8 LAKHS ON THE GROUND THAT THE CASE OF THE ASSESSEE D OES NOT FALL IN THE EXCEPTIONS MENTIONED UNDER RULE 6DD OF THE I.T. RULES 1962. A GGRIEVED WITH THE ORDER OF THE LD. CIT(A) FOR BOTH THE ASSESSMENT YEARS THE ASSES SEE IS IN APPEALS BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING BEFORE US ON BEHALF OF T HE ASSESSEE SHRI J.M.TRIVEDI APPEARED AND STATED THAT THE ASSESSEE STARTED THE B USINESS OF SHROFF IN HUF STATUS 25 YEARS AGO. IN THE YEAR 1979-80 THE ASSESSEE HUF AD VANCED AN AMOUNT OF RS.15 LAKHS TO ONE SHRI KARTHIK KETHIWADI BIJKENDRA OF UTTARSAN DA VILLAGE ON INTEREST. AS THE SAID PARTY FAILED THE ASSESSEE FILED A SUIT TO RECOVER THE AMOUNT OF RS.16 37 720/- INCLUDING INTEREST FROM THE SAID PARTY IN THE YEAR 1983 AND T HE HONBLE COURT DIRECTED TO PAY TO THE ASSESSEE RS.36 62 244/-. THIS AMOUNT WAS RECEIV ED FROM THE SAID PARTY AS UNDER: ITA NO. 2451&2452-AHD-09 4 12/05/1999 RS.22 10 101/- 07/08/2002 RS. 4 03 000/- 07/12/2002 RS.10 35 929/- 25/03/2005 RS. 13 214/- 6.1 THE COUNSEL OF THE ASSESSEE EXPLAINED THAT FINA NCIAL POSITION OF THE ASSESSEE STARTED WORSENING ON ACCOUNT OF LOAN OF RS.14 LAKHS GIVEN TO SHRI KARTHIK KETHIWADI BIJKENDRA OF UTTARSANDA VILLAGE ON INTEREST. THE PA RTY COULD NOT REPAY THE AMOUNT. AFTER THE DECREE WAS PASSED IN FAVOUR OF THE ASSESS EE IT RECEIVED THE PAYMENT FROM SHRI KARTHIK KETHIWADI BIJKENDRA OF UTTARSANDA AS STATED IN THE ASSESSMENT ORDER. THE DEBTORS WERE PRESSING HARD AND INSISTING FOR CA SH PAYMENT. THEREFORE THE ASSESSEE STARTED IMMEDIATELY REPAYING ITS OBLIGATIO N IN CASH FOR BOTH THE YEARS. IT WAS ALSO CONTENDED THAT THE ASSESSEE WAS CARRYING ON TH E BUSINESS OF SHROFF I.E. MONEY LENDING AND ADVANCING LOAN ETC. THE ASSESSEE WAS THEREFORE OF THE BONA FIDE BELIEF THAT DEALING IN MONEY SECTIONS 269SS AND 269T DOES NOT APPLY. IT IS ONLY WHEN THE PENALTIES IN QUESTION WERE LEVIED THE ASSESSEE CAM E TO KNOW THAT ITS ACTION IS BASED ON WRONG BUT BONA FIDE BELIEF. HE CONTENDED THAT THIS BONA FIDE BELIEF CO NSTITUTES A REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE I.T. ACT 1961. THEREFORE PENALTY LEVIED UNDER SECTION 271E FOR BOTH THE ASS ESSMENT YEARS BE CANCELLED. THE LD. COUNSEL OF THE ASSESSEE ALSO DREW OUR ATTENTION TO THE OBSERVATIONS OF THE LD. CIT(A) IN THE IMPUGNED ORDERS WHEREIN HE STATED THAT THE ASSESSEE FAILED TO PROVE THAT HIS CASE FALLS IN THE EXCEPTIONS MENTIONED UNDER RULE 6 DD OF I.T. RULES 1962. ON THE BASIS OF THIS OBSERVATION HE PLEADED THAT THE ASSE SSEE WAS OF THE BONA FIDE BELIEF THAT CASH REPAYMENT OF LOAN IN CASE OF A PERSON WHO IS DOING SHROFF BUSINESS IS COVERED BY SECTION 40A(3) BUT SINCE THE DEBTORS WERE PRESSI NG HARD AND FOR MAKING CASH PAYMENT ITS CASE IS COVERED UNDER RULE 6DD OF THE I.T. RULES 1962. HE ALSO PLEADED THAT THE ASSESSEE IS ABOUT 80 YEARS OLD. NEITHER IN THE PAST NOR IN FUTURE PENALTY UNDER SECTION 271E WAS LEVIED ON IT. THEREFORE IT WAS OF THE BONA FIDE BELIEF THAT REPAYMENT OF LOAN IN CASE OF A PERSON WHO IS DOING SHROFF B USINESS IN CASH UNDER EXCEPTIONAL CIRCUMSTANCES CAN BE MADE WITHOUT VIOLATING ANY PR OVISIONS OF THE I.T. ACT. ITA NO. 2451&2452-AHD-09 5 7. ON THE OTHER HAND SHRI SAMIR TEKRIWAL SR.D.R. APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). THE LD. D.R. POINTED OUT THAT FOR BOTH THE ASSESSMENT YEARS NO VOLUNTARY RE TURNS WERE FURNISHED BY THE ASSESSEE. FOR BOTH THE ASSESSMENT YEARS THE AO ISS UED NOTICE UNDER SECTION 148 AS THERE WAS SEARCH ACTION UNDER SECTION 132 OF THE I. T. ACT 1961. AS PER THE DECREE OF THE HONBLE COURT THE ASSESSEE RECEIVED PAYMENT OF RS. 36 62 244/- WHICH WAS DEPOSITED BY THE ASSESSEE IN ITS BANK ACCOUNT NO. 3 921 WITH BANK OF MAHARASHTRA. THE ASSESSEE COULD HAVE EASILY PAID TO ITS DEBTOR EITHE R THROUGH ACCOUNT PAYEE CHEQUE OR BANK DRAFT. SINCE THERE WAS A REASONABLE CAUSE WITH IN THE MEANING OF SECTION 273B PENALTY OF RS. 18 19 870/- AND RS.8 LAKHS WERE RIGH TLY LEVIED BY THE ADDITIONAL C.I.T. CENTRAL RANGE BARODA FOR BOTH THE ASSESSMENT YEARS AND THE LD. CIT(A) IS LEGALLY AND FACTUALLY CORRECT IN CONFIRMING THE SAME. 8. RIVAL SUBMISSIONS WERE CONSIDERED. IT IS PERTINE NT TO NOTE THAT INCOME ASSESSED FOR THE ASSESSMENT YEAR 2000-01 IS (-) RS.13 320/- WHEREAS FOR THE ASSESSMENT YEAR 2003-04 IT IS ONLY RS.1 71 366/-. IN BOTH THE ASSES SMENT YEARS THE AO HAS ACCEPTED THAT THE ASSESSEE HAS REFUNDED THE LOANS/DEPOSITS WHICH THE ASSESSEE TOOK ABOUT 25 YEARS AGO I.E. SOMEWHERE IN THE ASSESSMENT YEAR 19 79-80 AND ADVANCED AMOUNT OF RS.14 LAKHS TO SHRI KARTHIK KETHIWADI BIJKENDRA OF UTTARSANDA VILLAGE ON INTEREST. THE SAID PARTY PAID THE INTEREST FOR INITIAL 2 TO 3 YEA RS BUT STOPPED PAYING INTEREST THEREAFTER. THE ASSESSEE FILED PETITION BEFORE THE HONBLE COURT IN THE YEAR 1983 TO RECOVER THE AMOUNT OF RS.16 37 720/- INCLUDING INTE REST FROM THE ABOVE PERSON. THE HONBLE COURT DIRECTED TO PAY TO THE ASSESSEE RS.36 62 344/- OUT OF WHICH THE ASSESSEE HAS PAID RS. 18 19 870/- IN THE ASSESSMEN T YEAR 2000-2001 AND RS.8 LAKHS IN THE ASSESSMENT YEAR 2003-2004 IN CASH. THIS AMOUNT WAS PAID IN EACH TO THE VARIOUS DEBTORS AS THEY WERE INSISTING CASH PAYMENT AND THE Y WERE VISITING ASSESSEES HOUSE EVERYDAY FOR THE PAYMENT. BEFORE BOTH THE LOWER AUT HORITIES THE ASSESSEE CONTENDED THAT HE WAS OF THE BONA FIDE BELIEF THAT DOING SHROFF BUSINESS HE MADE THE PAY MENT TO THE DEBTORS IN CASH UNDER EXCEPTIONAL CIRCUMSTANCES AS PROVIDED IN RULE 6DD OF I.T. RULES 1962. IT IS TRUE THAT THIS BONAFIDE BELIEF O F THE ASSESSEE WAS WRONG BUT WE ARE OF THE VIEW THAT THE REVENUE AUTHORITIES OUGHT TO HAVE TAKEN A LENIENT VIEW BECAUSE THERE ITA NO. 2451&2452-AHD-09 6 WAS A REASONABLE CAUSE WITHIN THE MEANING OF SECTIO N 273B OF THE ACT FOR REPAYING LONG-OUTSTANDING DUES IN CASH. WE ARE OF THE VIEW T HAT THE PLEA OF THE ASSESSEE THAT HE CAN REPAY THE DEBTORS IN CASH CONSTITUTES A REASON ABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE I.T.ACT 1961. SECTION 273B ST ARTS WITH A NON OBSTANTE CLAUSE AND PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN SEVERAL PROVISIONS ENUMERATED THEREIN INCLUDING SECTION 271E NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE AS THE CASE MAY BE FOR ANY FAILURE REFER RED TO IN THE PROVISIONS CONTAINED IN SECTION 269SS OR 269T IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. THEREFORE IN ORDER TO BRING IN APPLICATIO N OF S. 271E IN THE BACKDROP OF SECTION 273B ABSENCE OF REASONABLE CAUSE EXISTENC E OF WHICH HAS TO BE ESTABLISHED BY THE ASSESSEE IS THE SINE QUA NON. THE INITIAL B URDEN IS ON THE ASSESSEE TO SHOW THAT THERE EXISTS REASONABLE CAUSE. IN THE PRESENT CASE LOOKING TO THE FACTS THAT THE ASSESSEE IS OF ABOUT 80 YEARS OLD AND AFTER PROLONGED LITIGA TION HE WON THE CASE AND GOT RS. RS.36 62 344/-. DEBTORS WERE PRESSING HARD AND INSI STING ON CASH PAYMENT. UNDER THE AFORESAID CIRCUMSTANCES THE ASSESSEE REPAID THE DE BTORS IN CASH. 8.1 IN THESE CIRCUMSTANCES THE BONA FIDE BELIEF O F THE ASSESSEE THAT IT CAN REPAY THE LONG OUTSTANDING DUES TO ITS DEBTORS IN CASH CONSTI TUTES A REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B. FOR THIS REASONABLE CAUSE WE CANCEL THE PENALTY OF RS.18 19 870/- IN THE ASSESSMENT YEAR 2000-2001 AN D RS.8 LAKHS IN THE ASSESSMENT YEAR 2003-2004 LEVIED UNDER SECTION 271E BY THE AO AND CONFIRMED BY THE LD. CIT(A) FOR BOTH THE ASSESSMENT YEARS. 9. IN THE RESULT BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. 3 - 2!% 4' & 27 / 09 /2011 ! 5 - 60 7 THIS ORDER PRONOUNCED IN COURT ON 27/09/2011. SD/- SD/- (A.MOHAN ALANKAMONY) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27/09/2011 ITA NO. 2451&2452-AHD-09 7 - -- - +18 +18 +18 +18 98%1& 98%1& 98%1& 98%1&- -- - 1. )* 2. + )* 3. 1 /= 4. /=- - 5. 8@6 +1' 7 6. 6B C3 D/ F 7 TALUKDAR/ SR. P.S.